Wrap Up the Month Smoothly: Month-End Checklist for Small Businesses

Professional businesses initiate the month by setting up new accounts and finalize it by closing out the prior month’s accounts. So, the starting period and ending period of a month are the crucial times for businesses. Usually, the account closing period takes a long time for some businesses, and some of them will finish it in a very short period. To simplify the month-end process, it's essential to follow a structured checklist.   

What are the duties that must be done at the month's closing period? What are the benefits of it? These questions are answered in this blog. Start exploring this blog to gain interesting information regarding the month-end checklist for small businesses. 

Explaining the Month-End Close for Small Businesses    

The “month-end close” is a crucial accounting process in which small businesses finalize and close the financial records of the preceding month. Here, all the financial records of the particular month will be collected, organized, reviewed, and closed, and for the next month, the new accounts will be opened. This month-end closing process benefits small businesses in numerous ways. Most crucially, it helps in identifying the financial functioning of the business, how much it has earned that month, whether any fraudulent activities have taken place, etc.  

Essential Month-End Checklist for Small Business Owners   

The essential month-end checklist that must be followed by the business owners is mentioned below.  

1. Gathering of Financial Information and Recording the Transactions 

In this process, the complete details about the income and expenses of the business are gathered. It can be collected from the financial reports, sales reports, bank statements, vendor invoices, etc.    

After gathering all the data, it must be recorded properly. The details recorded must be clear and concise to create the month-end reports.   

2. Conduct Financial Reconciliation   

Account reconciliation helps verify whether the recorded transactions in the account book match the bank statement. It helps in checking the accuracy of the data entered, any missed recording of invoice payments, any duplicate payments entered, etc.     

3. Follow Up on Unpaid Invoices  

A crucial task to be done at the month-end is following up on unpaid invoices. If there are any unpaid invoices for the business, then the month-end would be a perfect time to follow up. For some clients, the salaries will be credited at the end or at the start of the month. So, reminding the clients about the pending payments initiates them to make the payment.   

4. Analyze Your Financial Statements 

The next process to do in analyzing the three financial statements is the balance sheet, income statement, and cash flow statement. The balance sheet outlines the amount that the business possesses and is indebted for. The income statement shows the profit, loss, and overall financial health of the business. The cash flow statement shows the cash inflow and outflow of the business. 

Frequent Issues Faced During Month-End Closing 

During the month-end closing process, there is a chance for issues to occur. Some of the challenges that may arise are listed below.  

• When the accounting process and reconciliation process are done manually, it may create errors. This error occurrence comes as a big challenge for the month-end checklist.  
• Lack of standardized workflows creates confusion and problems in various procedures.  
• When the clients make late payments or the vendor invoices are paid late, it creates an issue in the financial report.  
• The finance team often experiences stress during the month-end process, raising the likelihood of inaccuracies.  
• When the confusion arises and is not cleared immediately, it affects the other processes too and becomes a challenge for them.  

The perfect solutions for overcoming these challenges and completing the month-end closing checklist completely are mentioned below.  

1. Making use of online accounting software. 

2. Giving proper training to the employees who perform these steps. 

3. Automate the repetitive work.  

Doing the activities of the month-end checklist is crucial for the financial stability of the business and for its welfare.